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CNN Wolf Blitzer Reports

Will Republican Control Allow the War in Iraq to Proceed More Quickly?; U.S. Undertakes Operations to Find Scud Missiles

Aired November 06, 2002 - 17:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


(BEGIN VIDEOTAPE)
WOLF BLITZER, ANCHOR (voice-over): Is the way now clear for war? The president's picks get the nod from voters but what about battle plans?

Clearing the way; a secret operation to seek out Iraq's Scuds.

Could it be career interrupted for girl interrupted, a jury of her peers reaches a verdict.

UNIDENTIFIED FEMALE: We, the jury, find the defendant Winona Ryder guilt of the crime of vandalism.

BLITZER: A royal mess for the royal family, Diana's butler tells all.

UNIDENTIFIED FEMALE: He's singing like a canary and there's nothing anyone can do to stop him.

BLITZER: I'll speak live with Sir David Frost. And, striking new research on the medical front, can a common cholesterol drug defeat a devastating disease?

(END VIDEOTAPE)

BLITZER: It's Wednesday, November 06, 2002. I'm Wolf Blitzer in Washington. Is the path now clear for a possible U.S. war with Iraq? Today, many believe that possibility for war is significantly greater than it was at this time only yesterday, the reason an American president with new political momentum.

(BEGIN VIDEOTAPE)

BLITZER (voice-over): The Bush White House is doing everything it can to avoid gloating over Tuesday's election results, but make no mistake, while President Bush was not on the ballot he is a big winner, and the White House is seizing on the momentum in the showdown with Iraq.

ARI FLEISCHER, WHITE HOUSE PRESS SECRETARY: The president has gone to the United Nations and asked the United Nations to help preserve the peace by passing a strong, effective resolution that will make Saddam Hussein disarm. But, the president was heartened by last night's results.

BLITZER: The administration has handed the U.N. Security Council its latest resolution on Iraq, warning of, quote, "serious consequences if Baghdad again tries to skirt U.N. weapons inspectors."

And the White House is pressing for action.

JOHN NEGROPONTE, U.S. AMBASSADOR TO U.N.: It is our intention to have the resolution put to vote sometime during the course of the day on Friday.

BLITZER: The message is clear to Saddam Hussein and to U.S. critics in Europe and elsewhere. President Bush is stronger now at home and will use that as leverage to squeeze Baghdad. How might Saddam Hussein react to the U.S. elections?

STANLEY BEDLINGTON, FORMER CIA ANALYST: There's no doubt that Saddam Hussein would have viewed the results of this election with a great deal of concern. He will see this as possibly reinforcing Bush's foreign policy, particularly that policy as it relates to Iraq and may, therefore, stimulate an invasion.

BLITZER: The latest draft resolution leaves any possible U.S. or U.N. response wide open if Iraq violates the inspections. That lack of specificity may bring reluctant European allies toward the U.S. position, and perhaps looming even larger an American president with fresh political momentum at home.

BEDLINGTON: Germany and France I think will be inclined to say OK, you've got your sort of majority now in the Senate and the House and maybe we'll just have to go along with you.

(END VIDEOTAPE)

BLITZER (voice-over): Later this hour, we'll have more on the showdown with Iraq, including the hunt for Iraqi Scuds. First, here's your chance to weigh in on this important story. Our web question of the day is this: Does the election outcome strengthen President Bush's hand with Iraq? We'll have the results later in this broadcast.

Vote at cnn.com/wolf. While you're there, I'd love to hear from you. Send me your comments, your questions. I'll try to read some of them on the air each day at the end of this program. That's also, of course, where you can read my daily online column, cnn.com/wolf.

In other news, the shoplifting trial of actress Winona Ryder has ended with a conviction. CNN's Paul Clinton is in Beverly Hills and he has details -- Paul.

PAUL CLINTON, CNN CORRESPONDENT: Hi, Wolf. Yes, we are live here at the Beverly Hills Courthouse, where the verdict on Winona Ryder's shoplifting trial came down approximately two hours ago. Now, after deliberating for seven hours spanned over three days, the jury made their decision.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: We, the jury, in the above-entitled action find the defendant, Winona Ryder, not guilty of the crime of Second Degree Commercial Burglary in violation of Penal Code § 459, a felony, as charged in Count 1 of the information.

(END VIDEO CLIP)

CLINTON: Now, she was found guilty of two other charges, one for Grand Theft and one for Vandalism. Now, at the heart of this case was the security video at Saks Fifth Avenue. This was the cornerstone of the case for the prosecution. It all boils down to what you saw and what you didn't see.

Now, you did see Winona Ryder walking around Saks Fifth Avenue with a lot of items of clothing, going from department to department. You saw her going in and out of dressing rooms. You did not see her cutting off security tags. You did not see any blood, which are all accusations made by the prosecution. And then also despite defense claims that they were after her for her fame, the prosecution absolutely denies that claim.

(BEGIN VIDEO CLIP)

ANN RUNDLE, PROSECUTOR: This case was never about jail time. We never asked for any jail time. We will not be asking for any jail time in this matter. We were simply asking or Ms. Ryder to take responsibility for her conduct and that's what this trial has been about.

(END VIDEO CLIP)

CLINTON: Now, Wolf, the sentencing comes down on December 6th. That's when we'll find out what exactly the sentence will be and whether she'll be doing jail time or not, back to you.

BLITZER: Paul Clinton in Beverly Hills thanks very much. Let's get some legal analysis now of this case. Joining me Roger Cossack of Court TV, formerly of CNN TV, thanks Roger.

ROGER COSSACK, LEGAL ANALYST, COURT TV: Hello, Wolf, nice to see you.

BLITZER: Thanks, Roger for coming back. What do you make of this conviction?

COSSACK: Well, I don't think it's an unusual conviction. It's unusual in the sense that she got convicted of a felony. Look there seemed to be a strong and a large amount of evidence. There was un- contradicted testimony. That tape was pretty tough to overcome. But you know this is the kind of case that most of the time gets resolved long before a trial.

A misdemeanor plea is entered. She pays a fine. She's perhaps barred from Saks Fifth Avenue. Maybe she has to have some training, some treatment, some impulse treatment, whatever it may be but very rarely, I can't think of another time where a case like this would end up as a felony trial.

BLITZER: She's convicted of a felony and you'd think if she would have pleaded guilty she could have gotten off on a misdemeanor?

COSSACK: You know she's convicted of two felonies is what she's convicted of and I think that most of the time these are the kinds of cases that are resolved by misdemeanors.

Now, California has an unusual sentencing system and it's been a while since I've been back in California, but oftentimes cases like these can be made misdemeanors at time of sentence and later on after she serves a period of probation and carries out what her probation should be, even have her record totally expunged. But, as Winona Ryder sits tonight, she sits convicted of two felony convictions.

BLITZER: And you heard the prosecutor say this was never about serving jail time. Will she serve jail time do you think?

COSSACK: I would be shocked. I mean when you have a prosecutor saying I'm not asking for jail time, obviously the defense is going to put its best foot forward in saying that she shouldn't serve any jail time. Then it would be just the judge on his own, acting almost in a sense as a runaway judge saying well, I think in this case she needs some jail time and that's just not going to happen.

BLITZER: You know Mark Geragos, her criminal defense attorney. He's often a guest here on CNN. Our viewers know him. What happened here? Why didn't he work out some sort of quiet little plea agreement instead of letting this go before a jury, if the evidence was as compelling, those videotapes, as we apparently saw it was?

COSSACK: Well, you know, I've spoken to Mark about this and obviously there's attorney/client privilege and there's a lot of things he obviously would not tell me and should not tell me. But I would tell you this, a lot of times you have situations with clients where, famous clients, where they just have a difficult time admitting or taking responsibility for something that is so tawdry as someone like Winona Ryder who we would expect that would have plenty of money to pay her bills.

And, you run into a problem with your client. You know the client looks at it and says, you know, my memory tells me that I did this, but reality tells me that I must have never done this and the reality one is the one that wins out and you just can't get your client to go in there and cooperate. Plus the fact, if they weren't offering her a misdemeanor, there was really no other way for Mark Geragos to go other than try this case. I mean nobody is going to walk in there and plead her guilty to a felony. They're going to go in front of a jury and make them convict her.

BLITZER: Does she have any previous records or anything like that that would have necessarily come into play here or is this a first time offense?

COSSACK: You know, this is a first time offense but allegedly there have been some past instances in her life where she has been detained a couple of times. These are allegations that the prosecution wanted to get in front of the jury of prior bad conduct that the judge wouldn't allow in, no convictions and no charges, but a couple of different times where she allegedly had been detained. So, that can be brought up at sentencing if the prosecution feels that it's necessary to do so, but the judge refused to let it go in front of the jury for the obvious prejudicial problem it would have caused.

BLITZER: The lesson learned, don't shoplift, to our viewers out there.

COSSACK: Wolf Blitzer, from your lips, I'm never going to shoplift.

BLITZER: And don't ever think about that.

COSSACK: I'll never do it.

BLITZER: Roger Cossack of Court TV thanks very much. Groundbreaking medical news making headlines right now, potential new treatment for multiple sclerosis, promising results in an anti- cholesterol drug. Our Elizabeth Cohen will join us when we come back.

Plus, Diana and the Queen, secrets revealed, the butler spills all causing a royal scandal. Sir David Frost has live reaction. He'll join us live from London. Plus, a former vice president says goodbye to a political future again. But first, let's take a look at some other news making headlines around the world.

(BEGIN VIDEOTAPE)

BLITZER (voice-over): Rolling flames, a dozen people were killed when fire broke out inside a sleeping car on a train rolling through France. Five of the victims were Americans, all members of the same family, including an eight-year-old boy and a 12-year-old girl. The overnight express train was on its way from Paris to Vienna, Austria.

Also in Europe, an air crash, a Lux Air commuter flight from Berlin went down in thick fog coming into the Luxembourg Airport. Of the 22 people onboard, at least 18 died.

Caracas capture, Venezuelan authorities have arrested an alleged U.S. drug smuggler. James Spencer Springette was on the FBI's Most Wanted List. A king in court, the 34-year-old king of Swaziland is in a legal battle with the mother of the woman he's picked to become his tenth wife. The mother says her 18-year-old daughter was abducted by palace aides. The king, Africa's last absolute monarch, says the mother is being used by his opponents.

Wider worship, after beginning in several countries yesterday, observances of Ramadan spread across the Muslim world today. Ramadan is the holiest month of the year for followers of Islam.

Bonfires in Britain Bonfire Night celebrates the failure of the 1605 plot to kill King James I and blow up parliament. There also were marches and fireworks, and that's our look around the world.

(COMMERCIAL BREAK)

BLITZER: Now to groundbreaking medical news that may one day stop a killer disease. Our Medical Correspondent Elizabeth Cohen tells us why there may be new hope for people with multiple sclerosis. What's happening on this front, Elizabeth?

ELIZABETH COHEN, CNN MEDICAL CORRESPONDENT: Well, Wolf, this front is very interesting because this new hope is not coming from a drug designed to combat M.S. It's coming from a drug that's designed to combat cholesterol.

(BEGIN VIDEOTAPE)

COHEN (voice-over): No drug has been found yet to reverse the ravages of multiple sclerosis but a study out today in the journal "Nature" may point in the right direction and the direction may be towards medicine already on pharmacy shelves. When researchers gave the cholesterol lowering drug Lipitor to paralyzed mice with a disease similar to M.S., their paralysis improved and in some cases disappeared. How does the drug work?

When people have M.S. their immune systems attacks nerves; Lipitor and drugs like it, called statins, appear to tell the immune system to back off and may go even further and actually protect the nerves. And why would a cholesterol drug affect the immune system? Scientists say it's a biological coincidence. The same enzyme involved in cholesterol production is also involved in the immune system. Some 300,000 Americans have M.S., including Montel Williams and Terry Garth, both of whom have been paid by drug companies for their work on M.S. awareness.

MONTEL WILLIAMS, TV HOST: I get up every single morning not wanting to get out of my bed, not wanting to put my feet on the floor. There are some nights when I go home at six o'clock, seven o'clock at night, I really it's hard pressed for me to be walking around but I do it anyway.

COHEN: Scientists now want to know if the drug which helps mice could also help people. "It's exciting but it's animal work," said a spokesman for the M.S. Society. "People with M.S. should not go to a drug store and ask for Lipitor."

Doctors are now testing statin drugs and a small group of people with M.S. Results are expected in the next few months.

(END VIDEOTAPE)

COHEN: Now, large doses of these drugs called statins can cause muscle and liver damage and doctors need to keep that in mind as they proceed along with the human trials -- Wolf.

BLITZER: What kind of doses were these mice getting? Were they similar to what a human might take?

COHEN: Not at all. In fact, I've been told that they were about ten times what's considered the safe level for a human being and that's why when they conduct the human trials, obviously they can't use ten times beyond what's considered safe. They have to use a safe level, so there is some concern that at that low level you may not see the kind of improvement that you saw with the mice at the high dosages.

BLITZER: How long do you think if it works, if in fact what's apparently working for mice will work in humans, how long before people with M.S. will be allowed to start taking these kinds of drugs?

COHEN: I think it will be quite a while. The first trials where the results are expected aren't expected for a couple of months. That's only 41 patients. You then need to go and do larger studies with more patients. One thing that might help it come out sooner for M.S. patients is that Lipitor has already been prescribed to so many people for cholesterol, so they already know what the safety profile is. This isn't a brand new drug that's coming out.

BLITZER: And what about the immune system if you take a lot of these cholesterol type of statin drugs, what happens to the immune system?

COHEN: Well, for M.S. it appears to actually help the immune system stop doing the bad things that it was doing, but there are some concerns that it might make the immune system do something bad in another part of the body or in another system of the body. So, there is a concern that while it can have a good effect on the immune system, it might possibly also have a bad effect on the immune system.

BLITZER: Elizabeth Cohen with potentially critical news for our viewers out there thanks very much for that report with some encouragement. Thank you very much. And, the royal tell-all that has London reeling. The butler sells his story sparing no details about Diana and the queen. Sir David Frost joins us live from London for all the fallout. Plus, a close call in the war on terror, did stinger missiles almost end up in the hands of al Qaeda? And, strange times in the deep south, two candidates declare themselves the new governor, stay with us.

(COMMERCIAL BREAK)

BLITZER: Welcome back. Royal gossip tongues are wagging furiously in Britain over the latest revelations from the mouth of Princess Diana's butler Paul Burrell. The headlines tell the story. One of the hottest items in the Daily Mirror reportedly has to do with a warning from Queen Elizabeth. CNN Senior International Correspondent Nic Robertson is in London with all the juicy details.

(BEGIN VIDEOTAPE)

NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: In the Daily Mirror newspaper, the British tabloid that paid nearly half a million dollars for the royal right to Paul Burrell's story, an account of the butler's meeting with the queen, a three-hour meeting, they were both standing, the meeting taking place about two months after Princess Diana's death. In that meeting, the queen said to Paul Burrell, "Paul, be careful. No one has ever been so close to a member of my family as you. There are forces at work. There are powers at work in this country of which we have little knowledge."

Burrell, according to the "Daily Mirror," took that to mean that possibly his life was under threat.

Now, according to the "Daily Mirror" as well, in that meeting the queen told Burrell that she had reached out many times to Princess Diana to try and build bridges. Burrell reportedly responded to the queen: "Mum (ph), you talk in black and white. Princess Diana speaks in color."

Now, according to the "Daily Mirror's" editor, Piers Morgan, the interview given by Burrell not just for the money, in fact really for Burrell, he says, to set the historical record straight and settle scores according to the Daily Mirror, to settle scores with Princess Diana's family, the Spencers.

PIERS MORGAN, EDITOR, "DAILY MIRROR": I think the Spencer family have a lot to answer for and they all cued up to give evidence to try and get him jailed and, you know, as he says he was closer to Diana, certainly laterally in her life than any of the family, and he feels that they were really getting their own back because they resented that relationship.

ROBERTSON: The "Daily Mirror" says it plans to continue in serialization of Burrell's accounts. It says on Thursday it will talk about the Spencer family; however, they say that will not put the Spencer family in a positive light. However, the "Daily Mirror" says that while Burrell has many, many secrets, many he doesn't plan to break to the public in any way.

In fact, the "Daily Mirror" says that Burrell intends no harm to the queen, to Princess Diana, to her sons William and Harry. In fact, apparently all his accounts, according to the "Daily Mirror," regarding the royal family will put the royal family in a sympathetic light. Nic Robertson CNN, London.

(END VIDEOTAPE)

BLITZER: Joining us now with his insight on this and other major issues of the day Sir David Frost, host of the BBC's "Breakfast with Frost," certainly one of the best interviewers in the business, a good friend our ours as well. Sir David thanks so much for joining us. What do you make of this suggestion that his life might be in some sort of danger by going public with this kind of information?

SIR DAVID FROST, HOST "BREAKFAST WITH FROST" BBC: Well, it seems difficult to believe but there was one footnote. Nic there was talking about the fact that this has been serialized in the "Daily Mirror" and in the "Daily Mirror" today, Paul Burrell says: "What's the queen's favorite newspaper?" And guess what he says? "I know which order the papers will be put on her breakfast table and the `Mirror' was always religiously placed at the top of the pile." Isn't that poetic?

But, basically I think the thing is, Wolf, that the people of this country are absolutely buffeted today and bewildered. First of all, they had the buildup to this trial when the lies that the police told to Prince Charles and so on that he'd sold a lot of these goods abroad and so on, they were put out, and they thought maybe this Paul Burrell was the villain.

Then suddenly the intervention of the queen last week and suddenly by the weekend Paul Burrell was the hero, almost the saint, and as Nic was saying the Spencers were the villains. But now suddenly, now he's told his story or sold his story. Suddenly, we're getting every other newspaper that failed to get it saying that he's the hypocrite and he's the villain again.

So, the answer is everybody here is absolutely befuddled by this soap opera and it is a soap opera when you read it, but then you suddenly realize that there are real people suffering in the middle of all this, Prince William, Prince Harry, the (UNINTELLIGIBLE) family and you realize maybe it's not such a soap opera after all.

BLITZER: And just for the record, he did receive what about $400,000 for telling the story to the newspaper. That's at least what we read in the papers over here. What did you learn from this interview with Paul Burrell about Princess Diana, Sir David Frost that you didn't know before, the most shocking information?

FROST: Well, I don't know that it was the most shocking information but the story of her stripping off and going off to meet her boyfriend wearing only a fur coat was quite memorable, I think. But in general, of course you've got this confusion that somehow the 39-page affidavit that he did for the court months ago also got leaked and so people are pummeled. I think they're actually punch drunk with all these revelations. I don't think that anyone can think of something tomorrow to come up with that would really thrill people because they've had so much already, dips on every side.

BLITZER: People here, at least, are shocked by that one revelation that she was naked wearing only a fur coat going off to meet a boyfriend. Are people shocked by that in England as well?

FROST: Well, I think they were fascinated by it. That's why I was picking on that because I mean I think they were intrigued. It's a rather attractive tale, isn't it? I don't think it's particularly shocking but it's rather an attractive tale. Most people that read it today said, God, that's a great idea. I think I'll try that. They were women fortunately.

BLITZER: The whole life of Diana has gone through so many changes in terms of the public attitudes, especially in England toward her. Certainly a lot of the information he's releasing is not very flattering.

FROST: No. In the end, he says he's going to be firmer. That's probably a euphemism about the Spencers than anybody else because he feels they were partially responsible for his trial. But, while it's not flattering, well of course nobody wants this sort of stuff to come out. I mean even Mr. and Mrs. Perkins down the road at #22 wouldn't want this sort of detail even if she went out to meet her husband, you know, wearing a football kit or whatever. It's all so personal. It must be hell to read this stuff if you're in the middle of it.

BLITZER: While I have you, Sir David Frost, talk to me a little bit about the reaction over there on the other side of the Atlantic to the news here, major news about this huge Republican victory in these midterm elections, the boost that President Bush obviously has received?

FROST: That's a fascinating point, Wolf, because there's no doubt that people in England, some of the press and so on, have underestimated President Bush. He's not an East Coast figure that they understand as an American president. Anyone from the south, they don't fully understand over here, and in fact I was just looking at my interview because there's one person who's never underestimated George Bush and that's Tony Blair.

And when I was talking to him last month, I was asking him about President Bush and he said, I find him incredibly easy to work with. I think it's a pity there is a such a parity of him in parts of the media here because I find him very easy to deal with, very open, very transparent, and you know the best truth of this is, I mean I've been involved in two major military conflicts since I became prime minister, Kosovo and Afghanistan. And he goes on talking like that.

And, where in fact Tony Blair has never underestimated George Bush, people have been slow to understand George Bush over here but I think they're increasingly doing so and the papers today are reporting that maybe it doesn't give him total prominence over Princess Diana and the fur coat, but they're giving it good space and I think the message is getting through that they've probably underestimated, as maybe some of his opponents have, George Bush's ongoing pulling power.

BLITZER: I began this newscast by suggested that Saddam Hussein might be the big loser in this huge victory for the Republicans here in the United States. Are the Europeans getting ready for a possible U.S. led war against Iraq?

FROST: Well, the attitude there, I think Chancellor Schroeder probably is one of the losers in Europe over this big victory for President Bush, but that's his problem. I think -- basically I guess the feeling is pretty similar to Britain. Here in Britain 70/30, yes, we should go in with the blessing of the U.N., 70-30; we should go in if we don't have the blessing of the U.N. That's the way they're divided at the moment. Tony Blair doesn't say outright that they'll go in alone with President Bush if he has to, but he leaves that open and everyone assumes that he will. So that's the position at the moment here.

It's very the U.N. has never had better publicity in terms of its power or we may see lack of power. But that's the situation at the moment, and people are fascinated.

I've been putting together a thing about the lessons of the first Gulf War for our friends at the History Channel. And it's really interesting how many of the lessons from that last war always find an exit strategy, always try and take the ground, all of those things. Those lessons are coming back and we've got to learn those lessons as we go into Gulf War II if it happens.

BLITZER: Sir David Frost, we'll have you back. Thanks, as usual, for joining us.

FROST: It's always a pleasure, Wolf. Greetings to all of your viewers.

BLITZER: Our viewers in North America are always happy to see you. And you can hear more details about the butler's story and the royal scandal on "CONNIE CHUNG TONIGHT." That's at 8 p.m. Eastern.

In a moment, weapons -- watch al Qaeda try to buy it, but an FBI crackdown prevented the sale. Also, finger on the trigger -- a new reports says Saddam Hussein has the power to launch scud missiles but will he really use them? We'll go live to the Pentagon. Plus, voters seem to look the other way on the economy. But could it come back to haunt Republicans in 2004? A closer look still to come.

(COMMERCIAL BREAK)

BLITZER: Welcome back to CNN. I'm Wolf Blitzer. Coming up, the FBI makes key arrests in the fight against terror.

The attorney general, John Ashcroft today announced key arrests in the war against terrorism in Hong Kong and South America. CNN justice correspondent, Kelli Arena, has the story.

(BEGIN VIDEOTAPE)

KELLI ARENA, CNN JUSTICE CORRESPONDENT (voice-over): Three men in police custody in Hong Kong are facing charges in the United States for alleged trying to trade drugs for weapons for use by the al Qaeda terrorist network.

JOHN ASHCROFT, UNITED STATES ATTORNEY GENERAL: An indictment was unsealed this morning in San Diego charging two Pakistani nationals and one United States citizen with conspiring to provide stinger antiaircraft missiles to anti-U.S. forces in Afghanistan.

ARENA: Stingers are shoulder-fired U.S. made missiles often used to attack low flying aircraft. This is the first known arrest in Hong Kong of anyone with alleged ties to al Qaeda.

BRUCE HOFFMAN, TERRORISM EXPERT: It fits a pattern of al Qaeda operations is that when they're pressed -- when they feel hemmed in in one particular geographical area of the world, they immediately turn to softer, what they see as more benign operational environments.

ARENA: The twin wars on drugs and terror are not confined to al Qaeda. In another alleged drugs for weapons scheme, U.S. agents arrested four people charged with plotting to deliver $25 million worth of weapons to the Columbian United Self Defense Forces, known as the AUC.

ASA HUTCHINSON, DEA ADMINISTRATOR: We have learned and we have demonstrated that drug traffickers and terrorists work out of the same jungle. They plan in the same cave, and they train in the same desert.

(END VIDEOTAPE)

ARENA: The connection between the drug trade and terrorism is not new, but terrorism experts say that it has taken on added importance as other income streams have been cut off. And the drug trade does have one lethal advantage and that, Wolf, is constant demand.

BLITZER: Unfortunately, that's true. Does the U.S. want to see extradited these guys arrested in Hong Kong, bring them back here to the United States?

ARENA: Yes, we do have an extradition agreement with Hong Kong and the U.S has filed some paperwork. But court has been adjourned until mid November. Hong Kong officials say they're waiting for more supporting documentation. The attorney general was asked today about that. He would only say that Hong Kong Officials were cooperating. He didn't want to go beyond that, but it is fully expected that these three men will be extradited back here.

BLITZER: All right, Kelli Arena, thanks very much.

Iraq launched dozen of scud missiles in the Persian Gulf War. CNN has obtained a U.S. intelligence review of how Iraq might use its remaining scuds, if it has some. Let's go live to our senior Pentagon correspondent, Jamie McIntyre -- Jamie.

JAMIE MCINTYRE, CNN SENIOR PENTAGON CORRESPONDENT: Well, Wolf, according to the U.S. intelligence assessment, Iraq has believed at least to be hiding at least two dozen scud missiles left over from the Gulf War, which could be launched on Israel on short notice. The assessment obtained by CNN predicts that Iraq won't fire scuds unless the regime is collapsing. But that is a stated U.S. military goal. And it concludes Iraqi scud missiles could be ready to fire in as little as a half day or as long as a couple of weeks, depending on how well they've been maintained.

Unlike 1991, Israel has promised to respond to any Iraqi scud attack. And Pentagon sources say the U.S. has assured Israel it will make every effort to destroy the remaining missiles as soon as war starts. To that end, sources say the U.S. has already increased its aerial surveillance of suspected scud sites in western Iraq. And Israel has conducted some covert ground operations.

In the 1991 war, the U.S. had no success hunting Iraqi scuds, but now, the U.S. has better surveillance technology to find them and better patriot missiles to shoot them down -- Wolf.

BLITZER: I guess the working assumption over at the Pentagon as well, Jamie, is that if the Iraqis do launch scuds against populated centers in Israel and do some damage, this time, the Israelis almost certainly won't remain on the sidelines.

MCINTYRE: That's the word that Israel has given the United States, Wolf.

BLITZER: Jamie McIntyre at the Pentagon, thanks very much for that report.

Authorities say they found it in the sniper suspect's car but where did it come? Coming up, police say the mystery surrounding a piece of evidence is now solved. And hear how a major move by this man will impact your bank account and your money. Stay with us.

(COMMERCIAL BREAK)

BLITZER: An election controversy of 2002, two candidates claim they're the winner, but find out what happened. That's coming up on WOLF BLITZER REPORTS.

(COMMERCIAL BREAK)

BLITZER: New charges in the Washington area sniper case, charges that could carry the death penalty. A grand jury in Virginia returned indictments today and there's word that a stolen laptop computer has been linked to the sniper suspects. The latest now from CNN's Patty Davis.

(BEGIN VIDEOTAPE)

PATTY DAVIS, CNN CORRESPONDENT (voice-over): The latest charges from Fairfax County prosecutors include two counts of capital murder. John Muhammad and John Lee Malvo are charged with gunning down 47- year-old FBI analyst Linda Franklin outside a Home Depot in Falls Church, Virginia October 14.

ROBERT HORAN, FAIRFAX CO. PROSECUTOR: Both of them have been charged now with two counts, each of which potentially carry the death penalty under Virginia law.

DAVIS: To get a death penalty conviction in Virginia, prosecutors have to prove who pulled the trigger in Franklin's murder. But Muhammad and 17-year-old Malvo could also get the death penalty if convicted of violating Virginia's new antiterrorism law passed after the September 11 terror attacks.

Sources tell CNN Attorney General John Ashcroft could decide by the end of the week which jurisdiction will try the case first.

ASHCROFT: I expect there to be a consensus among the jurisdictions involved to move forward first in the jurisdiction which provides the best law and the best facts to bring individuals to swift and sure justice.

DAVIS (on camera): Sources say Fairfax County is a leading contender along with Prince William County. Both have experienced prosecutors and Virginia allows for the execution of minors. That's not the case in Maryland where six people were killed. Sources say Maryland is out of the running.

(voice-over): Meanwhile law enforcement sources tell CNN a laptop computer stolen from a man shot six times outside his restaurant in Clinton, Maryland in early September is the same laptop found in Mohammad's car. If that shooting less than a mile from the home of Muhammad's ex-wife is officially connected, it would mean the Washington shootings started a full month before police believe it began.

Patty Davis, CNN, Washington.

(END VIDEOTAPE)

BLITZER: Election controversy in the south. How can two candidates be the winner? A voter news alert when we return. Also, the fed cut interest rates. Is it a good sign for your pocketbook or an ominous warning of rough times ahead? We'll have a closer look when we come back.

(COMMERCIAL BREAK)

BLITZER: Most of the races were decided last night, but there are some new developments today in the mid term elections.

Incumbent Democrat Don Singleman and Republican challenger Bob Riley both claim they've won the election for governor of Alabama. Results reported to the news media shows Singleman won the race by two-tenths of one percent, but Riley says that official results will show he won by about 3,000 votes. A recount is expected.

A recount also is possible in South Dakota. Results there show Incumbent Democratic Senator Tim Johnson beating Republican John Thune by less than 600 votes. Thune says he'll wait until the canvassing process is complete before he decides whether to challenge the results.

In Minnesota, Walter Mondale has conceded defeat in his bid to rejoin the U.S. Senate. The former vice president lost to Republican Norm Coleman by about two percentage points. Mondale entered the Minnesota senate race at the last minute after a plane crash killed incumbent Democratic Senator Paul Wellstone.

The Federal Reserve today cut an interest rate by half a point. Its first such action in almost a year. The move reflects a slowing economic recovery and concerns about how a possible war with Iraq would affect the confidence of consumers and businesses. To find out what this rate cut means for you, let's go live to "Fortune" magazine's Andy Serwer. He's joining us in New York.

Andy, to our viewers watching out there, they hear a half point cut, what does that mean for them?

ANDY SERWER, "FORTUNE" MAGAZINE: Well, it means several things, Wolf. First of all, it means the Federal Reserve is on the case, on the ball, looking to shore up the economy, you know. We were talking about sliding back into a recession. Maybe we never left the recession, that kind of thing. Also, the rate cut will help businesses because banks will lower rates of money that they're lending to companies, so that means companies will be able to expand, maybe create some new jobs.

Mortgages may dip back down. It probably won't affect people's credit cards, though because those rates have been awfully sticky. That's a risky business for banks, so they haven't really been cutting rates too much in that department.

BLITZER: And as we watched Alan Greenspan walk into the Federal Reserve in that file videotape that we showed, why -- the interest rates are already very, very low almost historic lows across the board, why does Alan Greenspan and company think this is really going to make so much of a difference in trying to strengthen the economy?

SERWER: Well, it's interesting. You know we were expecting a quarter percent cut this afternoon, Wolf, and we got a half percent cut, twice as big as what we expected. People on Wall Street are calling this the shotgun approach here. A lot of people have been thinking there might be some more incremental steps.

Basically, what this does is provide a psychological lift to the economy, because, you know, it actually takes six to 18 months for a rate cut to really work itself into the economy. Greenspan and the other members of the Federal Reserve are concerned about Iraq and fears of that war hanging over the economy and preventing consumers end businesses from spending and what they wanted to show here was, hey, look, money is even cheaper now than it was before. So why don't you go out and borrow some money and create jobs and get this economy humming again.

But you're right. There is a real concern that we could cut and get close to zero, which is what happened in Japan and that's an awful mess over there.

BLITZER: So as a general principal, it's probably a good time for those of our viewers who have mortgages to rethink about maybe refinancing those mortgages.

SERWER: Oh, absolutely. And you know, refinancing, if you're not doing that and you have a percentage point that you can save by refinancing, you are just sending money unnecessarily to the bank and no one needs to do that.

BLITZER: No one needs to do that is absolutely right. Andy Serwer, thanks for that useful information. Thank you very much, Andy.

Time's running out for your turn to weigh in on our "Web Questions of The Day." Does the election outcome strengthen President Bush's hand with Iraq? Log onto CNN.com/Wolf. That's where you can vote and we'll have the results immediately when we come back.

(COMMERCIAL BREAK)

BLITZER: Now, here's how you're weighing in on our "Web Questions of The Day." Earlier we asked -- does the election outcome strengthen the president's hand with Iraq? Look at this, 77 percent of you say yes, 23 percent of you say no. You can find the exact vote tally and continue to vote by the way on my Website at CNN.com/Wolf. Remember, this is not a scientific poll.

Time now to hear directly from you. We have a lot of e-mail. Cal writes us this -- "As an independent-thinking, registered Democrat, the elections reflect my willingness to vote Republican to avoid grid lock and sloshing around in our party's past. I wanted positive movement, not more blame."

This from Mike -- "This election means a lot for everyone. The stock market will grow, bills like Homeland Security that should have passed the Senate will now be passed and, Iraq will discover that it needs to cooperate."

Donna writes -- "The media had a great deal to do with the outcome of the election. G.W. Bush was on the air everyday. The Democrats did not get much positive airtime. The president owes the media a debt of gratitude."

And this from Marcia -- "Shocking! No exit polls this Election Day. Thank heavens. I've wanted them to disappear for years. Maybe now we'll all have to wait for real, true voting results." That's the way we used to do in the old fashioned days.

That's all the time we have today. Please join me again tomorrow 5:00 p.m. Eastern. Please join me weekdays at noon Eastern as well for "SHOWDOWN IRAQ." Until then, thanks very much for watching. I'm Wolf Blitzer in Washington. "LOU DOBBS MONEYLINE" is up next.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com





More Quickly?; U.S. Undertakes Operations to Find Scud Missiles>


Aired November 6, 2002 - 17:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(BEGIN VIDEOTAPE)
WOLF BLITZER, ANCHOR (voice-over): Is the way now clear for war? The president's picks get the nod from voters but what about battle plans?

Clearing the way; a secret operation to seek out Iraq's Scuds.

Could it be career interrupted for girl interrupted, a jury of her peers reaches a verdict.

UNIDENTIFIED FEMALE: We, the jury, find the defendant Winona Ryder guilt of the crime of vandalism.

BLITZER: A royal mess for the royal family, Diana's butler tells all.

UNIDENTIFIED FEMALE: He's singing like a canary and there's nothing anyone can do to stop him.

BLITZER: I'll speak live with Sir David Frost. And, striking new research on the medical front, can a common cholesterol drug defeat a devastating disease?

(END VIDEOTAPE)

BLITZER: It's Wednesday, November 06, 2002. I'm Wolf Blitzer in Washington. Is the path now clear for a possible U.S. war with Iraq? Today, many believe that possibility for war is significantly greater than it was at this time only yesterday, the reason an American president with new political momentum.

(BEGIN VIDEOTAPE)

BLITZER (voice-over): The Bush White House is doing everything it can to avoid gloating over Tuesday's election results, but make no mistake, while President Bush was not on the ballot he is a big winner, and the White House is seizing on the momentum in the showdown with Iraq.

ARI FLEISCHER, WHITE HOUSE PRESS SECRETARY: The president has gone to the United Nations and asked the United Nations to help preserve the peace by passing a strong, effective resolution that will make Saddam Hussein disarm. But, the president was heartened by last night's results.

BLITZER: The administration has handed the U.N. Security Council its latest resolution on Iraq, warning of, quote, "serious consequences if Baghdad again tries to skirt U.N. weapons inspectors."

And the White House is pressing for action.

JOHN NEGROPONTE, U.S. AMBASSADOR TO U.N.: It is our intention to have the resolution put to vote sometime during the course of the day on Friday.

BLITZER: The message is clear to Saddam Hussein and to U.S. critics in Europe and elsewhere. President Bush is stronger now at home and will use that as leverage to squeeze Baghdad. How might Saddam Hussein react to the U.S. elections?

STANLEY BEDLINGTON, FORMER CIA ANALYST: There's no doubt that Saddam Hussein would have viewed the results of this election with a great deal of concern. He will see this as possibly reinforcing Bush's foreign policy, particularly that policy as it relates to Iraq and may, therefore, stimulate an invasion.

BLITZER: The latest draft resolution leaves any possible U.S. or U.N. response wide open if Iraq violates the inspections. That lack of specificity may bring reluctant European allies toward the U.S. position, and perhaps looming even larger an American president with fresh political momentum at home.

BEDLINGTON: Germany and France I think will be inclined to say OK, you've got your sort of majority now in the Senate and the House and maybe we'll just have to go along with you.

(END VIDEOTAPE)

BLITZER (voice-over): Later this hour, we'll have more on the showdown with Iraq, including the hunt for Iraqi Scuds. First, here's your chance to weigh in on this important story. Our web question of the day is this: Does the election outcome strengthen President Bush's hand with Iraq? We'll have the results later in this broadcast.

Vote at cnn.com/wolf. While you're there, I'd love to hear from you. Send me your comments, your questions. I'll try to read some of them on the air each day at the end of this program. That's also, of course, where you can read my daily online column, cnn.com/wolf.

In other news, the shoplifting trial of actress Winona Ryder has ended with a conviction. CNN's Paul Clinton is in Beverly Hills and he has details -- Paul.

PAUL CLINTON, CNN CORRESPONDENT: Hi, Wolf. Yes, we are live here at the Beverly Hills Courthouse, where the verdict on Winona Ryder's shoplifting trial came down approximately two hours ago. Now, after deliberating for seven hours spanned over three days, the jury made their decision.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: We, the jury, in the above-entitled action find the defendant, Winona Ryder, not guilty of the crime of Second Degree Commercial Burglary in violation of Penal Code § 459, a felony, as charged in Count 1 of the information.

(END VIDEO CLIP)

CLINTON: Now, she was found guilty of two other charges, one for Grand Theft and one for Vandalism. Now, at the heart of this case was the security video at Saks Fifth Avenue. This was the cornerstone of the case for the prosecution. It all boils down to what you saw and what you didn't see.

Now, you did see Winona Ryder walking around Saks Fifth Avenue with a lot of items of clothing, going from department to department. You saw her going in and out of dressing rooms. You did not see her cutting off security tags. You did not see any blood, which are all accusations made by the prosecution. And then also despite defense claims that they were after her for her fame, the prosecution absolutely denies that claim.

(BEGIN VIDEO CLIP)

ANN RUNDLE, PROSECUTOR: This case was never about jail time. We never asked for any jail time. We will not be asking for any jail time in this matter. We were simply asking or Ms. Ryder to take responsibility for her conduct and that's what this trial has been about.

(END VIDEO CLIP)

CLINTON: Now, Wolf, the sentencing comes down on December 6th. That's when we'll find out what exactly the sentence will be and whether she'll be doing jail time or not, back to you.

BLITZER: Paul Clinton in Beverly Hills thanks very much. Let's get some legal analysis now of this case. Joining me Roger Cossack of Court TV, formerly of CNN TV, thanks Roger.

ROGER COSSACK, LEGAL ANALYST, COURT TV: Hello, Wolf, nice to see you.

BLITZER: Thanks, Roger for coming back. What do you make of this conviction?

COSSACK: Well, I don't think it's an unusual conviction. It's unusual in the sense that she got convicted of a felony. Look there seemed to be a strong and a large amount of evidence. There was un- contradicted testimony. That tape was pretty tough to overcome. But you know this is the kind of case that most of the time gets resolved long before a trial.

A misdemeanor plea is entered. She pays a fine. She's perhaps barred from Saks Fifth Avenue. Maybe she has to have some training, some treatment, some impulse treatment, whatever it may be but very rarely, I can't think of another time where a case like this would end up as a felony trial.

BLITZER: She's convicted of a felony and you'd think if she would have pleaded guilty she could have gotten off on a misdemeanor?

COSSACK: You know she's convicted of two felonies is what she's convicted of and I think that most of the time these are the kinds of cases that are resolved by misdemeanors.

Now, California has an unusual sentencing system and it's been a while since I've been back in California, but oftentimes cases like these can be made misdemeanors at time of sentence and later on after she serves a period of probation and carries out what her probation should be, even have her record totally expunged. But, as Winona Ryder sits tonight, she sits convicted of two felony convictions.

BLITZER: And you heard the prosecutor say this was never about serving jail time. Will she serve jail time do you think?

COSSACK: I would be shocked. I mean when you have a prosecutor saying I'm not asking for jail time, obviously the defense is going to put its best foot forward in saying that she shouldn't serve any jail time. Then it would be just the judge on his own, acting almost in a sense as a runaway judge saying well, I think in this case she needs some jail time and that's just not going to happen.

BLITZER: You know Mark Geragos, her criminal defense attorney. He's often a guest here on CNN. Our viewers know him. What happened here? Why didn't he work out some sort of quiet little plea agreement instead of letting this go before a jury, if the evidence was as compelling, those videotapes, as we apparently saw it was?

COSSACK: Well, you know, I've spoken to Mark about this and obviously there's attorney/client privilege and there's a lot of things he obviously would not tell me and should not tell me. But I would tell you this, a lot of times you have situations with clients where, famous clients, where they just have a difficult time admitting or taking responsibility for something that is so tawdry as someone like Winona Ryder who we would expect that would have plenty of money to pay her bills.

And, you run into a problem with your client. You know the client looks at it and says, you know, my memory tells me that I did this, but reality tells me that I must have never done this and the reality one is the one that wins out and you just can't get your client to go in there and cooperate. Plus the fact, if they weren't offering her a misdemeanor, there was really no other way for Mark Geragos to go other than try this case. I mean nobody is going to walk in there and plead her guilty to a felony. They're going to go in front of a jury and make them convict her.

BLITZER: Does she have any previous records or anything like that that would have necessarily come into play here or is this a first time offense?

COSSACK: You know, this is a first time offense but allegedly there have been some past instances in her life where she has been detained a couple of times. These are allegations that the prosecution wanted to get in front of the jury of prior bad conduct that the judge wouldn't allow in, no convictions and no charges, but a couple of different times where she allegedly had been detained. So, that can be brought up at sentencing if the prosecution feels that it's necessary to do so, but the judge refused to let it go in front of the jury for the obvious prejudicial problem it would have caused.

BLITZER: The lesson learned, don't shoplift, to our viewers out there.

COSSACK: Wolf Blitzer, from your lips, I'm never going to shoplift.

BLITZER: And don't ever think about that.

COSSACK: I'll never do it.

BLITZER: Roger Cossack of Court TV thanks very much. Groundbreaking medical news making headlines right now, potential new treatment for multiple sclerosis, promising results in an anti- cholesterol drug. Our Elizabeth Cohen will join us when we come back.

Plus, Diana and the Queen, secrets revealed, the butler spills all causing a royal scandal. Sir David Frost has live reaction. He'll join us live from London. Plus, a former vice president says goodbye to a political future again. But first, let's take a look at some other news making headlines around the world.

(BEGIN VIDEOTAPE)

BLITZER (voice-over): Rolling flames, a dozen people were killed when fire broke out inside a sleeping car on a train rolling through France. Five of the victims were Americans, all members of the same family, including an eight-year-old boy and a 12-year-old girl. The overnight express train was on its way from Paris to Vienna, Austria.

Also in Europe, an air crash, a Lux Air commuter flight from Berlin went down in thick fog coming into the Luxembourg Airport. Of the 22 people onboard, at least 18 died.

Caracas capture, Venezuelan authorities have arrested an alleged U.S. drug smuggler. James Spencer Springette was on the FBI's Most Wanted List. A king in court, the 34-year-old king of Swaziland is in a legal battle with the mother of the woman he's picked to become his tenth wife. The mother says her 18-year-old daughter was abducted by palace aides. The king, Africa's last absolute monarch, says the mother is being used by his opponents.

Wider worship, after beginning in several countries yesterday, observances of Ramadan spread across the Muslim world today. Ramadan is the holiest month of the year for followers of Islam.

Bonfires in Britain Bonfire Night celebrates the failure of the 1605 plot to kill King James I and blow up parliament. There also were marches and fireworks, and that's our look around the world.

(COMMERCIAL BREAK)

BLITZER: Now to groundbreaking medical news that may one day stop a killer disease. Our Medical Correspondent Elizabeth Cohen tells us why there may be new hope for people with multiple sclerosis. What's happening on this front, Elizabeth?

ELIZABETH COHEN, CNN MEDICAL CORRESPONDENT: Well, Wolf, this front is very interesting because this new hope is not coming from a drug designed to combat M.S. It's coming from a drug that's designed to combat cholesterol.

(BEGIN VIDEOTAPE)

COHEN (voice-over): No drug has been found yet to reverse the ravages of multiple sclerosis but a study out today in the journal "Nature" may point in the right direction and the direction may be towards medicine already on pharmacy shelves. When researchers gave the cholesterol lowering drug Lipitor to paralyzed mice with a disease similar to M.S., their paralysis improved and in some cases disappeared. How does the drug work?

When people have M.S. their immune systems attacks nerves; Lipitor and drugs like it, called statins, appear to tell the immune system to back off and may go even further and actually protect the nerves. And why would a cholesterol drug affect the immune system? Scientists say it's a biological coincidence. The same enzyme involved in cholesterol production is also involved in the immune system. Some 300,000 Americans have M.S., including Montel Williams and Terry Garth, both of whom have been paid by drug companies for their work on M.S. awareness.

MONTEL WILLIAMS, TV HOST: I get up every single morning not wanting to get out of my bed, not wanting to put my feet on the floor. There are some nights when I go home at six o'clock, seven o'clock at night, I really it's hard pressed for me to be walking around but I do it anyway.

COHEN: Scientists now want to know if the drug which helps mice could also help people. "It's exciting but it's animal work," said a spokesman for the M.S. Society. "People with M.S. should not go to a drug store and ask for Lipitor."

Doctors are now testing statin drugs and a small group of people with M.S. Results are expected in the next few months.

(END VIDEOTAPE)

COHEN: Now, large doses of these drugs called statins can cause muscle and liver damage and doctors need to keep that in mind as they proceed along with the human trials -- Wolf.

BLITZER: What kind of doses were these mice getting? Were they similar to what a human might take?

COHEN: Not at all. In fact, I've been told that they were about ten times what's considered the safe level for a human being and that's why when they conduct the human trials, obviously they can't use ten times beyond what's considered safe. They have to use a safe level, so there is some concern that at that low level you may not see the kind of improvement that you saw with the mice at the high dosages.

BLITZER: How long do you think if it works, if in fact what's apparently working for mice will work in humans, how long before people with M.S. will be allowed to start taking these kinds of drugs?

COHEN: I think it will be quite a while. The first trials where the results are expected aren't expected for a couple of months. That's only 41 patients. You then need to go and do larger studies with more patients. One thing that might help it come out sooner for M.S. patients is that Lipitor has already been prescribed to so many people for cholesterol, so they already know what the safety profile is. This isn't a brand new drug that's coming out.

BLITZER: And what about the immune system if you take a lot of these cholesterol type of statin drugs, what happens to the immune system?

COHEN: Well, for M.S. it appears to actually help the immune system stop doing the bad things that it was doing, but there are some concerns that it might make the immune system do something bad in another part of the body or in another system of the body. So, there is a concern that while it can have a good effect on the immune system, it might possibly also have a bad effect on the immune system.

BLITZER: Elizabeth Cohen with potentially critical news for our viewers out there thanks very much for that report with some encouragement. Thank you very much. And, the royal tell-all that has London reeling. The butler sells his story sparing no details about Diana and the queen. Sir David Frost joins us live from London for all the fallout. Plus, a close call in the war on terror, did stinger missiles almost end up in the hands of al Qaeda? And, strange times in the deep south, two candidates declare themselves the new governor, stay with us.

(COMMERCIAL BREAK)

BLITZER: Welcome back. Royal gossip tongues are wagging furiously in Britain over the latest revelations from the mouth of Princess Diana's butler Paul Burrell. The headlines tell the story. One of the hottest items in the Daily Mirror reportedly has to do with a warning from Queen Elizabeth. CNN Senior International Correspondent Nic Robertson is in London with all the juicy details.

(BEGIN VIDEOTAPE)

NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: In the Daily Mirror newspaper, the British tabloid that paid nearly half a million dollars for the royal right to Paul Burrell's story, an account of the butler's meeting with the queen, a three-hour meeting, they were both standing, the meeting taking place about two months after Princess Diana's death. In that meeting, the queen said to Paul Burrell, "Paul, be careful. No one has ever been so close to a member of my family as you. There are forces at work. There are powers at work in this country of which we have little knowledge."

Burrell, according to the "Daily Mirror," took that to mean that possibly his life was under threat.

Now, according to the "Daily Mirror" as well, in that meeting the queen told Burrell that she had reached out many times to Princess Diana to try and build bridges. Burrell reportedly responded to the queen: "Mum (ph), you talk in black and white. Princess Diana speaks in color."

Now, according to the "Daily Mirror's" editor, Piers Morgan, the interview given by Burrell not just for the money, in fact really for Burrell, he says, to set the historical record straight and settle scores according to the Daily Mirror, to settle scores with Princess Diana's family, the Spencers.

PIERS MORGAN, EDITOR, "DAILY MIRROR": I think the Spencer family have a lot to answer for and they all cued up to give evidence to try and get him jailed and, you know, as he says he was closer to Diana, certainly laterally in her life than any of the family, and he feels that they were really getting their own back because they resented that relationship.

ROBERTSON: The "Daily Mirror" says it plans to continue in serialization of Burrell's accounts. It says on Thursday it will talk about the Spencer family; however, they say that will not put the Spencer family in a positive light. However, the "Daily Mirror" says that while Burrell has many, many secrets, many he doesn't plan to break to the public in any way.

In fact, the "Daily Mirror" says that Burrell intends no harm to the queen, to Princess Diana, to her sons William and Harry. In fact, apparently all his accounts, according to the "Daily Mirror," regarding the royal family will put the royal family in a sympathetic light. Nic Robertson CNN, London.

(END VIDEOTAPE)

BLITZER: Joining us now with his insight on this and other major issues of the day Sir David Frost, host of the BBC's "Breakfast with Frost," certainly one of the best interviewers in the business, a good friend our ours as well. Sir David thanks so much for joining us. What do you make of this suggestion that his life might be in some sort of danger by going public with this kind of information?

SIR DAVID FROST, HOST "BREAKFAST WITH FROST" BBC: Well, it seems difficult to believe but there was one footnote. Nic there was talking about the fact that this has been serialized in the "Daily Mirror" and in the "Daily Mirror" today, Paul Burrell says: "What's the queen's favorite newspaper?" And guess what he says? "I know which order the papers will be put on her breakfast table and the `Mirror' was always religiously placed at the top of the pile." Isn't that poetic?

But, basically I think the thing is, Wolf, that the people of this country are absolutely buffeted today and bewildered. First of all, they had the buildup to this trial when the lies that the police told to Prince Charles and so on that he'd sold a lot of these goods abroad and so on, they were put out, and they thought maybe this Paul Burrell was the villain.

Then suddenly the intervention of the queen last week and suddenly by the weekend Paul Burrell was the hero, almost the saint, and as Nic was saying the Spencers were the villains. But now suddenly, now he's told his story or sold his story. Suddenly, we're getting every other newspaper that failed to get it saying that he's the hypocrite and he's the villain again.

So, the answer is everybody here is absolutely befuddled by this soap opera and it is a soap opera when you read it, but then you suddenly realize that there are real people suffering in the middle of all this, Prince William, Prince Harry, the (UNINTELLIGIBLE) family and you realize maybe it's not such a soap opera after all.

BLITZER: And just for the record, he did receive what about $400,000 for telling the story to the newspaper. That's at least what we read in the papers over here. What did you learn from this interview with Paul Burrell about Princess Diana, Sir David Frost that you didn't know before, the most shocking information?

FROST: Well, I don't know that it was the most shocking information but the story of her stripping off and going off to meet her boyfriend wearing only a fur coat was quite memorable, I think. But in general, of course you've got this confusion that somehow the 39-page affidavit that he did for the court months ago also got leaked and so people are pummeled. I think they're actually punch drunk with all these revelations. I don't think that anyone can think of something tomorrow to come up with that would really thrill people because they've had so much already, dips on every side.

BLITZER: People here, at least, are shocked by that one revelation that she was naked wearing only a fur coat going off to meet a boyfriend. Are people shocked by that in England as well?

FROST: Well, I think they were fascinated by it. That's why I was picking on that because I mean I think they were intrigued. It's a rather attractive tale, isn't it? I don't think it's particularly shocking but it's rather an attractive tale. Most people that read it today said, God, that's a great idea. I think I'll try that. They were women fortunately.

BLITZER: The whole life of Diana has gone through so many changes in terms of the public attitudes, especially in England toward her. Certainly a lot of the information he's releasing is not very flattering.

FROST: No. In the end, he says he's going to be firmer. That's probably a euphemism about the Spencers than anybody else because he feels they were partially responsible for his trial. But, while it's not flattering, well of course nobody wants this sort of stuff to come out. I mean even Mr. and Mrs. Perkins down the road at #22 wouldn't want this sort of detail even if she went out to meet her husband, you know, wearing a football kit or whatever. It's all so personal. It must be hell to read this stuff if you're in the middle of it.

BLITZER: While I have you, Sir David Frost, talk to me a little bit about the reaction over there on the other side of the Atlantic to the news here, major news about this huge Republican victory in these midterm elections, the boost that President Bush obviously has received?

FROST: That's a fascinating point, Wolf, because there's no doubt that people in England, some of the press and so on, have underestimated President Bush. He's not an East Coast figure that they understand as an American president. Anyone from the south, they don't fully understand over here, and in fact I was just looking at my interview because there's one person who's never underestimated George Bush and that's Tony Blair.

And when I was talking to him last month, I was asking him about President Bush and he said, I find him incredibly easy to work with. I think it's a pity there is a such a parity of him in parts of the media here because I find him very easy to deal with, very open, very transparent, and you know the best truth of this is, I mean I've been involved in two major military conflicts since I became prime minister, Kosovo and Afghanistan. And he goes on talking like that.

And, where in fact Tony Blair has never underestimated George Bush, people have been slow to understand George Bush over here but I think they're increasingly doing so and the papers today are reporting that maybe it doesn't give him total prominence over Princess Diana and the fur coat, but they're giving it good space and I think the message is getting through that they've probably underestimated, as maybe some of his opponents have, George Bush's ongoing pulling power.

BLITZER: I began this newscast by suggested that Saddam Hussein might be the big loser in this huge victory for the Republicans here in the United States. Are the Europeans getting ready for a possible U.S. led war against Iraq?

FROST: Well, the attitude there, I think Chancellor Schroeder probably is one of the losers in Europe over this big victory for President Bush, but that's his problem. I think -- basically I guess the feeling is pretty similar to Britain. Here in Britain 70/30, yes, we should go in with the blessing of the U.N., 70-30; we should go in if we don't have the blessing of the U.N. That's the way they're divided at the moment. Tony Blair doesn't say outright that they'll go in alone with President Bush if he has to, but he leaves that open and everyone assumes that he will. So that's the position at the moment here.

It's very the U.N. has never had better publicity in terms of its power or we may see lack of power. But that's the situation at the moment, and people are fascinated.

I've been putting together a thing about the lessons of the first Gulf War for our friends at the History Channel. And it's really interesting how many of the lessons from that last war always find an exit strategy, always try and take the ground, all of those things. Those lessons are coming back and we've got to learn those lessons as we go into Gulf War II if it happens.

BLITZER: Sir David Frost, we'll have you back. Thanks, as usual, for joining us.

FROST: It's always a pleasure, Wolf. Greetings to all of your viewers.

BLITZER: Our viewers in North America are always happy to see you. And you can hear more details about the butler's story and the royal scandal on "CONNIE CHUNG TONIGHT." That's at 8 p.m. Eastern.

In a moment, weapons -- watch al Qaeda try to buy it, but an FBI crackdown prevented the sale. Also, finger on the trigger -- a new reports says Saddam Hussein has the power to launch scud missiles but will he really use them? We'll go live to the Pentagon. Plus, voters seem to look the other way on the economy. But could it come back to haunt Republicans in 2004? A closer look still to come.

(COMMERCIAL BREAK)

BLITZER: Welcome back to CNN. I'm Wolf Blitzer. Coming up, the FBI makes key arrests in the fight against terror.

The attorney general, John Ashcroft today announced key arrests in the war against terrorism in Hong Kong and South America. CNN justice correspondent, Kelli Arena, has the story.

(BEGIN VIDEOTAPE)

KELLI ARENA, CNN JUSTICE CORRESPONDENT (voice-over): Three men in police custody in Hong Kong are facing charges in the United States for alleged trying to trade drugs for weapons for use by the al Qaeda terrorist network.

JOHN ASHCROFT, UNITED STATES ATTORNEY GENERAL: An indictment was unsealed this morning in San Diego charging two Pakistani nationals and one United States citizen with conspiring to provide stinger antiaircraft missiles to anti-U.S. forces in Afghanistan.

ARENA: Stingers are shoulder-fired U.S. made missiles often used to attack low flying aircraft. This is the first known arrest in Hong Kong of anyone with alleged ties to al Qaeda.

BRUCE HOFFMAN, TERRORISM EXPERT: It fits a pattern of al Qaeda operations is that when they're pressed -- when they feel hemmed in in one particular geographical area of the world, they immediately turn to softer, what they see as more benign operational environments.

ARENA: The twin wars on drugs and terror are not confined to al Qaeda. In another alleged drugs for weapons scheme, U.S. agents arrested four people charged with plotting to deliver $25 million worth of weapons to the Columbian United Self Defense Forces, known as the AUC.

ASA HUTCHINSON, DEA ADMINISTRATOR: We have learned and we have demonstrated that drug traffickers and terrorists work out of the same jungle. They plan in the same cave, and they train in the same desert.

(END VIDEOTAPE)

ARENA: The connection between the drug trade and terrorism is not new, but terrorism experts say that it has taken on added importance as other income streams have been cut off. And the drug trade does have one lethal advantage and that, Wolf, is constant demand.

BLITZER: Unfortunately, that's true. Does the U.S. want to see extradited these guys arrested in Hong Kong, bring them back here to the United States?

ARENA: Yes, we do have an extradition agreement with Hong Kong and the U.S has filed some paperwork. But court has been adjourned until mid November. Hong Kong officials say they're waiting for more supporting documentation. The attorney general was asked today about that. He would only say that Hong Kong Officials were cooperating. He didn't want to go beyond that, but it is fully expected that these three men will be extradited back here.

BLITZER: All right, Kelli Arena, thanks very much.

Iraq launched dozen of scud missiles in the Persian Gulf War. CNN has obtained a U.S. intelligence review of how Iraq might use its remaining scuds, if it has some. Let's go live to our senior Pentagon correspondent, Jamie McIntyre -- Jamie.

JAMIE MCINTYRE, CNN SENIOR PENTAGON CORRESPONDENT: Well, Wolf, according to the U.S. intelligence assessment, Iraq has believed at least to be hiding at least two dozen scud missiles left over from the Gulf War, which could be launched on Israel on short notice. The assessment obtained by CNN predicts that Iraq won't fire scuds unless the regime is collapsing. But that is a stated U.S. military goal. And it concludes Iraqi scud missiles could be ready to fire in as little as a half day or as long as a couple of weeks, depending on how well they've been maintained.

Unlike 1991, Israel has promised to respond to any Iraqi scud attack. And Pentagon sources say the U.S. has assured Israel it will make every effort to destroy the remaining missiles as soon as war starts. To that end, sources say the U.S. has already increased its aerial surveillance of suspected scud sites in western Iraq. And Israel has conducted some covert ground operations.

In the 1991 war, the U.S. had no success hunting Iraqi scuds, but now, the U.S. has better surveillance technology to find them and better patriot missiles to shoot them down -- Wolf.

BLITZER: I guess the working assumption over at the Pentagon as well, Jamie, is that if the Iraqis do launch scuds against populated centers in Israel and do some damage, this time, the Israelis almost certainly won't remain on the sidelines.

MCINTYRE: That's the word that Israel has given the United States, Wolf.

BLITZER: Jamie McIntyre at the Pentagon, thanks very much for that report.

Authorities say they found it in the sniper suspect's car but where did it come? Coming up, police say the mystery surrounding a piece of evidence is now solved. And hear how a major move by this man will impact your bank account and your money. Stay with us.

(COMMERCIAL BREAK)

BLITZER: An election controversy of 2002, two candidates claim they're the winner, but find out what happened. That's coming up on WOLF BLITZER REPORTS.

(COMMERCIAL BREAK)

BLITZER: New charges in the Washington area sniper case, charges that could carry the death penalty. A grand jury in Virginia returned indictments today and there's word that a stolen laptop computer has been linked to the sniper suspects. The latest now from CNN's Patty Davis.

(BEGIN VIDEOTAPE)

PATTY DAVIS, CNN CORRESPONDENT (voice-over): The latest charges from Fairfax County prosecutors include two counts of capital murder. John Muhammad and John Lee Malvo are charged with gunning down 47- year-old FBI analyst Linda Franklin outside a Home Depot in Falls Church, Virginia October 14.

ROBERT HORAN, FAIRFAX CO. PROSECUTOR: Both of them have been charged now with two counts, each of which potentially carry the death penalty under Virginia law.

DAVIS: To get a death penalty conviction in Virginia, prosecutors have to prove who pulled the trigger in Franklin's murder. But Muhammad and 17-year-old Malvo could also get the death penalty if convicted of violating Virginia's new antiterrorism law passed after the September 11 terror attacks.

Sources tell CNN Attorney General John Ashcroft could decide by the end of the week which jurisdiction will try the case first.

ASHCROFT: I expect there to be a consensus among the jurisdictions involved to move forward first in the jurisdiction which provides the best law and the best facts to bring individuals to swift and sure justice.

DAVIS (on camera): Sources say Fairfax County is a leading contender along with Prince William County. Both have experienced prosecutors and Virginia allows for the execution of minors. That's not the case in Maryland where six people were killed. Sources say Maryland is out of the running.

(voice-over): Meanwhile law enforcement sources tell CNN a laptop computer stolen from a man shot six times outside his restaurant in Clinton, Maryland in early September is the same laptop found in Mohammad's car. If that shooting less than a mile from the home of Muhammad's ex-wife is officially connected, it would mean the Washington shootings started a full month before police believe it began.

Patty Davis, CNN, Washington.

(END VIDEOTAPE)

BLITZER: Election controversy in the south. How can two candidates be the winner? A voter news alert when we return. Also, the fed cut interest rates. Is it a good sign for your pocketbook or an ominous warning of rough times ahead? We'll have a closer look when we come back.

(COMMERCIAL BREAK)

BLITZER: Most of the races were decided last night, but there are some new developments today in the mid term elections.

Incumbent Democrat Don Singleman and Republican challenger Bob Riley both claim they've won the election for governor of Alabama. Results reported to the news media shows Singleman won the race by two-tenths of one percent, but Riley says that official results will show he won by about 3,000 votes. A recount is expected.

A recount also is possible in South Dakota. Results there show Incumbent Democratic Senator Tim Johnson beating Republican John Thune by less than 600 votes. Thune says he'll wait until the canvassing process is complete before he decides whether to challenge the results.

In Minnesota, Walter Mondale has conceded defeat in his bid to rejoin the U.S. Senate. The former vice president lost to Republican Norm Coleman by about two percentage points. Mondale entered the Minnesota senate race at the last minute after a plane crash killed incumbent Democratic Senator Paul Wellstone.

The Federal Reserve today cut an interest rate by half a point. Its first such action in almost a year. The move reflects a slowing economic recovery and concerns about how a possible war with Iraq would affect the confidence of consumers and businesses. To find out what this rate cut means for you, let's go live to "Fortune" magazine's Andy Serwer. He's joining us in New York.

Andy, to our viewers watching out there, they hear a half point cut, what does that mean for them?

ANDY SERWER, "FORTUNE" MAGAZINE: Well, it means several things, Wolf. First of all, it means the Federal Reserve is on the case, on the ball, looking to shore up the economy, you know. We were talking about sliding back into a recession. Maybe we never left the recession, that kind of thing. Also, the rate cut will help businesses because banks will lower rates of money that they're lending to companies, so that means companies will be able to expand, maybe create some new jobs.

Mortgages may dip back down. It probably won't affect people's credit cards, though because those rates have been awfully sticky. That's a risky business for banks, so they haven't really been cutting rates too much in that department.

BLITZER: And as we watched Alan Greenspan walk into the Federal Reserve in that file videotape that we showed, why -- the interest rates are already very, very low almost historic lows across the board, why does Alan Greenspan and company think this is really going to make so much of a difference in trying to strengthen the economy?

SERWER: Well, it's interesting. You know we were expecting a quarter percent cut this afternoon, Wolf, and we got a half percent cut, twice as big as what we expected. People on Wall Street are calling this the shotgun approach here. A lot of people have been thinking there might be some more incremental steps.

Basically, what this does is provide a psychological lift to the economy, because, you know, it actually takes six to 18 months for a rate cut to really work itself into the economy. Greenspan and the other members of the Federal Reserve are concerned about Iraq and fears of that war hanging over the economy and preventing consumers end businesses from spending and what they wanted to show here was, hey, look, money is even cheaper now than it was before. So why don't you go out and borrow some money and create jobs and get this economy humming again.

But you're right. There is a real concern that we could cut and get close to zero, which is what happened in Japan and that's an awful mess over there.

BLITZER: So as a general principal, it's probably a good time for those of our viewers who have mortgages to rethink about maybe refinancing those mortgages.

SERWER: Oh, absolutely. And you know, refinancing, if you're not doing that and you have a percentage point that you can save by refinancing, you are just sending money unnecessarily to the bank and no one needs to do that.

BLITZER: No one needs to do that is absolutely right. Andy Serwer, thanks for that useful information. Thank you very much, Andy.

Time's running out for your turn to weigh in on our "Web Questions of The Day." Does the election outcome strengthen President Bush's hand with Iraq? Log onto CNN.com/Wolf. That's where you can vote and we'll have the results immediately when we come back.

(COMMERCIAL BREAK)

BLITZER: Now, here's how you're weighing in on our "Web Questions of The Day." Earlier we asked -- does the election outcome strengthen the president's hand with Iraq? Look at this, 77 percent of you say yes, 23 percent of you say no. You can find the exact vote tally and continue to vote by the way on my Website at CNN.com/Wolf. Remember, this is not a scientific poll.

Time now to hear directly from you. We have a lot of e-mail. Cal writes us this -- "As an independent-thinking, registered Democrat, the elections reflect my willingness to vote Republican to avoid grid lock and sloshing around in our party's past. I wanted positive movement, not more blame."

This from Mike -- "This election means a lot for everyone. The stock market will grow, bills like Homeland Security that should have passed the Senate will now be passed and, Iraq will discover that it needs to cooperate."

Donna writes -- "The media had a great deal to do with the outcome of the election. G.W. Bush was on the air everyday. The Democrats did not get much positive airtime. The president owes the media a debt of gratitude."

And this from Marcia -- "Shocking! No exit polls this Election Day. Thank heavens. I've wanted them to disappear for years. Maybe now we'll all have to wait for real, true voting results." That's the way we used to do in the old fashioned days.

That's all the time we have today. Please join me again tomorrow 5:00 p.m. Eastern. Please join me weekdays at noon Eastern as well for "SHOWDOWN IRAQ." Until then, thanks very much for watching. I'm Wolf Blitzer in Washington. "LOU DOBBS MONEYLINE" is up next.

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